|ABX.HE.AAA.07-01 via Markit|
He pointed out that the market was already pricing in this risk. The ABX Index (subprime mortgage-backed securities credit default swap index) was down 20% in the last three months and Bank of America (which he says is a proxy for the ABX Index at the Ira Sohn conference) was down 26% ($15 to $11). $11 is an important support level to hold on the chart. If $BAC breaks $11 it will visit levels not seen since April and May of 2009.
|$BAC - StockCharts.com|
In the first video Gundlach mentioned that he wasn't a buyer or seller of 10-year Treasurys at 3.25%. He is waiting for the market to make a move as QE2 ends and uncertainties continue with the debt ceiling and potential fiscal constraint. Oh and he is bullish on natural gas and would rather hold gemstones in his sock than carry gold (via Ira Sohn Conference). Lastly, Gundlach mentioned that he "sees a repricing lower in risk assets". He has 10% of assets in cash.
Gundlach was also interviewed by Business Insider